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Live from BS&T Executive Summit: An Inside Look at The Bank of New York Mellon Integration

Mergers and acquisitions are a fact of life in the financial services industry. If experts are correct, they will only pick up in pace in the coming months. One of the most recent mergers of note in the banking world involves that of The Bank of New York and Mellon Financial to form The Bank of New York Mellon. Mergers are never easy. And when it involves two financial institutions with over 100 years of experience each, integration becomes even more of a potential nightmare.

Mergers and acquisitions are a fact of life in the financial services industry. If experts are correct, they will only pick up in pace in the coming months. One of the most recent mergers of note in the banking world involves that of The Bank of New York and Mellon Financial to form The Bank of New York Mellon. Mergers are never easy. And when it involves two financial institutions with over 100 years of experience each, integration becomes even more of a potential nightmare.Sateesh Prabakaran, chief architect, systems & technology with the combined firm, gave Summit attendees an up-close look at the mammoth task of paring down the IT systems and applications of each respective institution. It is still a work in progress that the bank hopes to complete by 2009, said Prabakaran. The technology is vital in making this merger work since "the functions we perform in the financial markets make technology more than a collaborator but a business differentiator."

The challenges are many. The obvious one, he noted, was which systems and applications stay and go. Rationalizing these IT investments takes a lot of work and requires a good deal of objectivity, he explained. "We came up with a model where we'll eliminate redundancies and compose a future state made up of the most elegant and economically viable systems," Prabakaran said.

However, he notes that it's unrealistic to think that only one technology will survive. To help whittle things down, Prabakaran said the bank might look to take a harmonization or a resolution track. With harmonization, he explained, the bank won't pick and choose technologies. Rather it will create a service layer model where they will all "live" together for at least the next two years. There will also be a strategy to move these applications to gain economies of scale.

The other route is the resolution track. After all, he noted, "You can't continue to have multiple standards coexisting. So how do you pick the right one? That has been a big challenge of the data integration" piece.

Through it all, he said that it's vital not to lose sight of the original merger goals. IT must work in the same direction as the bank at large. Part of this process is to be open to feedback to measure just how on-track IT's side of the merger equation is.

In the end, however, Prabakaran's greatest challenge is the people aspect of the merger. It's a struggle for him to have to look someone in the eye and let them know they are no longer needed as the bank streamlines the joint IT operations. "This is something I'm losing sleep over. It's not always the most rational process but you must digest the realities and move on," he stated.

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